Who did in Vikram Pandit? By most accounts, the former hedge fund manager turned global banking CEO did a great job saving Citigroup Inc. from ruin after taking the job in 2007. Sure, Citi needed a government bailout to avoid bankruptcy — as did several other major U.S. banks. But it's hard to fault Mr. Pandit for his job in the corner office since then.
Yesterday, the bank reported solid third-quarter financial results. A big write-down of Citi's stake in the Morgan Stanley Smith Barney brokerage joint venture pulled reported profits down, but the bank continues to show improvement. “He's done a phenomenal job and he got screwed,” said Richard Bové, a banking analyst with Rochdale Securities LLC.
A "person with knowledge of the [board] discussions" who spoke to Bloomberg said the $2.9 billion Smith Barney-related write-down was one factor. The source also noted Mr. Pandit's inability to get the OK from regulators to boost the company's dividend earlier this year, as well as the two-notch credit rating downgrade from Moody's Investor Service.
"Those are all peripheral things," Mr. Bové said. "Citigroup is aggressively going after international business and aggressively cutting costs. He's been one of the most successful executives in the banking industry."
Mr. Bové, like other analysts following Citigroup, is at a loss to explain the sudden ouster — and it was an ouster, despite Mr. Pandit's memo to employees stating otherwise. “He was in complete control on the [earnings] conference call yesterday and I don't think he had any desire to leave the company,” Mr. Bové said. “There's a lot more to this story.”
How about this? Treasury Secretary Tim Geithner quits his job after the election and takes over as Citigroup chairman. Mr. Bové said it's not such a farfetched idea. “He doesn't want to be a two-term Treasury secretary. And what better place for him to land than Citigroup?” Mr. Bové said. “Like everybody else, he wants to shrink the U.S. banks. Maybe he needs to control one to do that.”
Of course, incoming CEO Michael Corbat — a career Citi hand — may not be so keen on the idea.